The FED Weekly

Lawrence: Welcome to The FED Weekly for
29 June - 5 July 2025, your essential

weekly briefing on the policies
and proposals shaping your career,

your benefits, and your retirement.

Whether you’re a current federal employee
navigating changes in the civil service,

or a retiree keeping a close watch on your
hard-earned pension and healthcare, this

is your source for the latest news from
Capitol Hill and the executive branch.

Each week, we cut through the noise to
bring you the critical updates on budget

negotiations, pay raises, workforce
policies, and the legislative battles that

directly impact the federal community.

Let's get you up to speed on
what happened this past week.

Issues That Affect Current
and Retired Federal Workers

In this period the biggest
development was on Capitol Hill.

Both the House and Senate
were working on H.R.1

(the “One Big Beautiful Bill”
budget reconciliation package).

Early reports noted that the House-passed
version included several proposed cuts

to federal retirement and health benefits
– for example, eliminating the FERS annuity

supplement for most early retirees and
switching annuity calculations from

a “high-3” to a “high-5” salary basis

. However, the Senate parliamentarian
later ruled those provisions out of

order under Senate rules, and by June 29
media reported that the Senate’s version

contained no cuts to current workers’ or
retirees’ earned benefits or union rights.

The Senate package was pared down
to non-controversial items (an

audit of FEHBP enrollment and budget
efficiency initiatives) with all

contested pension and pay cuts dropped.

Retired and active employees
alike cheered the outcome.

The National Active and Retired Federal
Employees Association (NARFE) noted

on July 1 that “no federal workforce
provisions opposed by NARFE made it into

the final [Senate] version” of H.R.1.

NARFE President Bill Shackelford
called this “a huge victory” for

workers and retirees, emphasizing
that cuts to vested pension

benefits and FEHB had been blocked.

As enacted and signed into law, current
feds and annuitants will see their

existing retirement and health benefits
preserved – a dramatic reversal from

what had been in earlier drafts.

Aside from the budget bill,
one legislative change of note

affecting federal retirees went
into effect earlier this year.

The Social Security Fairness Act (H.R.

82) was signed into law January
5, 2025, and repealed the Windfall

Elimination Provision (WEP) and
Government Pension Offset (GPO).

In practice this means over 2.8

million workers – including many
Civil Service Retirement System (CSRS)

retirees – will see higher Social
Security checks beginning in 2025.

The Social Security Administration
reports that affected retirees

started receiving the new, higher
benefits in the spring, with backpay

to January 2024 already disbursed.

On the investment side, federal employees’
retirement savings did well in June.

Thrift Savings Plan (TSP) funds
all rose in value last month.

The S Fund (small- and
mid-cap stocks) surged 5.40%

in June, bringing its 2025 gain
back into positive territory,

and the C Fund (large U.S.

stocks) was up 5.08%.

Bond-like funds (F and
G) also gained modestly.

Even those close-to-retirement
“L Funds” saw gains (e.g.

the L Income Fund +1.57%,

and all L Funds +3–4%).

These robust returns in June should help
preserve the value of TSP balances for

current employees and retirees alike.

Legislative summary (affecting all feds):

H.R.

1 (One Big Beautiful Bill Act) – A budget
reconciliation package in Congress.

The House had originally included
provisions cutting federal

retirement benefits (e.g.

eliminating the FERS supplement,
moving to “high-5” salary) and raising

pension contributions for many workers.

The Senate’s version (passed
July 1) removed all such cuts

to current or retired employees.

As enacted, the law does not reduce any
earned annuities or benefits for current

feds or retirees (the FERS supplement
cut is delayed to 2028, with current

employees already vested exempted).

This outcome means both working
and retired federal staff avoid

the drastic benefit changes that
were in the earlier House proposal.

In practical terms, active feds and
annuitants should see no change to

their current retirement annuities
or FEHB benefits from H.R.1,

and many CSRS retirees will
receive higher Social Security

checks under the fairness act.

Issues That Affect Current Federal Workers

Workforce and hiring: Job-seekers and
employee movement remain active topics.

Government Executive reported July 1
that after a surge in early 2025, the

rate of federal workers applying to
other jobs has “leveled out” in May.

Data from Indeed showed that job
applications by federal workers grew

~150% from January to April 2025,
particularly in agencies targeted

for cuts, but then fell 4% in May.

The analyst attributed the May decline
to hiring uncertainties and “deferred

resignations” (programs letting employees
postpone departure until fall), as well as

tightening openings at major contractors
(which saw 15% fewer postings YTD).

In short, current feds may find fewer
outside opportunities, and some are

delaying leaving federal service for now.

On July 2 Government Executive
reported a significant stall in pay

for non-supervisory DoD workers.

When Defense Secretary Hegseth abruptly
shut down all DoD advisory committees,

it indirectly froze the Federal Wage
System (blue-collar) pay adjustments.

Over 60,000 wage-grade feds (across
87 of 248 wage areas) are now waiting

for their 2025 pay raise, because
the wage adjudication panels can’t

meet without those committees.

This freeze affects about 30% of all
wage-grade federal employees nationwide.

As the article notes, federal law
requires annual pay adjustments for

these workers, so the delay means
tens of thousands of DoD blue-collar

employees are essentially on pay-hold
until the committees are reconstituted.

DoD says it plans to fix the process, but
meanwhile the affected workers have had

their raises postponed well into the year.

Another personnel issue arose
with OPM guidance on hiring.

Government Executive reported July 3
that the Office of Personnel Management

quietly told agencies to stop heavily
weighting the politically-charged

“favorite Executive Order” essay
question in federal applications.

OPM’s internal memo said answers to
those questions “are not scored or

rated” and should be treated as optional
– effectively rescinding an earlier plan

to use them as a qualification screen.

The change came amid legal challenges
that the questions amounted

to an ideological litmus test.

The Public Employees for Environmental
Responsibility (PEER) group praised

OPM’s “retreat” from what they
called an “illegal screening tactic”.

For current job applicants, this
means that agencies will not use the

controversial essay on allegiance to the
President as a factor in hiring decisions.

Union rights and collective bargaining:
On July 5 Reuters reported a major

court decision on federal unions.

A federal judge (Thomas Donato
in New York) permanently blocked

President Trump’s 2023 executive
order that sought to end collective

bargaining at most federal agencies.

Donato’s ruling applied to seven
agencies (Justice, Treasury, HHS, etc.)

plus five more (VA,
Agriculture, State, Labor, etc.)

that had been added.

He found the order was essentially
a retaliatory move against unions

for opposing Trump’s policies.

Unions cheered the verdict: AFGE
President Everett Kelley called

the blocked order a “retaliatory
attempt to bust federal unions”.

The White House said it would appeal.

In effect, current federal employees in
nearly all agencies will continue to have

union representation and bargaining rights
intact, despite the administration’s

earlier attempt to revoke them.

Legislation affecting current employees:
Aside from the budget bill discussed

earlier, another bill in Congress
is aimed mainly at active workers.

The Federal Retirement Fairness Act (H.R.

1522) was reintroduced February 24,
2025, with strong bipartisan support.

This act would help employees (especially
Postal Service letter carriers and similar

noncareer staff) by allowing them to
purchase service credit in FERS for time

they worked in non-career jobs (like
casual or transitional posts) after 1988.

In practice, it lets people whose
careers began in low-grade or part-time

roles (but doing the same work) count
that time toward their pensions.

NALC union leaders highlight that
more than 132,000 letter carriers

did not get retirement credit
for such periods, so H.R.1522

would let them “buy” that missing service.

(The bill has 24 cosponsors and
mirrors a prior version that had 131

bipartisan backers last Congress.)

If passed, this law would benefit
current workers by boosting their

future annuity amounts; there is no
effect on those who are already retired.

The Federal News Network noted
that Department of Government

Efficiency actions continue to
ripple through the workforce.

For instance, the blocked Defense
RIFs (above) stem from DOE’s RIF

orders being tied up in court.

The Federal Reduction Tracker
(a special ongoing report) shows

many RIF actions remain enjoined.

Meanwhile, one data point from Indeed
suggests moderate hiring activity

at agencies targeted for cuts.

It remains a fluid situation: current
employees are watching for any new

reduction-in-force or reorganization
plans (for example, USAID faced

proposals to eliminate it), and
many have delayed retirement through

the Deferred Resignation Program.

Overall, though, the news this week
on personnel policy has been largely

favorable to current feds – the
administration’s big cuts have been

halted by courts or Congress, and even
pay proposals have avoided immediate harm.

Issues That Affect Retired Federal Workers

Retired federal employees have been mostly
spared negative developments this week.

As noted above, H.R.1

ultimately removed all
cuts to retiree annuities.

The enacted version preserves
retirees’ earned benefits and does

not change current annuity formulas.

In plain terms, current annuitants
will continue receiving the same

pension amounts they had before.

One legislative item of special relevance
to retirees is the recently-enacted

Social Security Fairness Act (H.R.82).

Although it passed earlier this year,
its effects are only now being felt.

Under H.R.82

the WEP and GPO penalties were removed,
meaning many CSRS retirees are getting

higher Social Security checks this year.

This change takes hold retroactively
to 2024, and affected retirees

began seeing the results in
spring 2025 (with back-pay).

This law benefits some federal
retirees by substantially increasing

their Social Security income.

Another administrative development
could help retirees eventually: the

modernization of OPM’s retirement system.

Although announced last spring,
it will roll out in 2025 and

should speed retiree processing.

The Office of Personnel Management has
mandated that by July 15, 2025, all new

retirements be submitted electronically.

In theory, moving to a fully digital
application will cut the current backlog

(which can run several months) and
deliver final annuity calculations faster.

NARFE noted this could “cut back on
burdensome delays for federal retirees

awaiting their full retirement annuities”.

It remains to be seen if the new system
will fully eliminate processing lags,

but it is a positive step for those
already retired or about to retire.

On the benefits front, no news arose
this week about FEHBP or COLAs for

retirees (the next federal COLA
will be announced in late 2025).

Retirees should note that health
insurance rules remain stable: those

who met the 5-year FEHBP vesting rule
at retirement continue to have premium

support (about 72% government share).

And many retirees coordinate
Medicare with FEHB, often with cost

savings as Medicare becomes primary.

(For example, long-time FEHBP
carriers encourage new annuitants

to enroll in Medicare Part B once
eligible, since Medicare pays first.)

This week’s news did not
change any of those facts.

One current issue involves
surviving spouses.

Federal annuities for survivors
will continue to be deducted for

FEHB or FEGLI premiums as before.

(If a retiree was carrying family
FEHB, a surviving spouse must keep

FEHB or convert to self-only.)

There were no new proposals to alter
survivors’ or widows’ benefits this week.

In summary, retirees continue to
receive COLAs, FEHBP, and Social

Security under the old rules, and
the Social Security Fairness Act

is increasing checks for many.

The major legislative fights this period
all focused on current employees’ future

benefits; for now, retirees’ hard-earned
pensions and insurance remain intact.

And that’s a wrap on this week’s
Federal Workforce Roundup.

The landscape for federal employees
and retirees is constantly shifting,

with major decisions being made about
everything from pay and job security

to retirement benefits and the very
structure of the civil service.

Staying informed is your best tool.

Be sure to subscribe wherever you get your
podcasts, so you never miss an update.

Thanks for tuning in.

We’ll be back next week to
track the latest developments

and what they mean for you.

Until then, stay engaged and be well.